China’s economic development has not only led to enormous growth figures, but also to a severe degradation of the environment. Mass-consumption of fossil fuels like oil and coal in China contributed to reaching the level of the largest greenhouse gas emitter worldwide. For the Chinese government to react, it is crucial to take the electricity purchase decisions of households into account to successfully implement energy policies. Hereby, a Chinese social survey shall help to show the effects of economic and environmental factors on the consumers’ willingness to pay for the adoption of green electricity: the results of both a Linear Probability Model and a Probit model indicate that environmental factors do not play a crucial role when it comes to the consumers’ willingness to pay for higher prices/taxes in order to protect the environment – whereas the economic factor regarding the influence of price levels has a slightly more effective impact. Nonetheless, education and adequate information provision about the merits of green electricity seem to be a prerequisite in order to promote the purchase of renewable electricity.
Table of Contents
1. Introduction
2. Previous Research
2.1 Overview of China’s energy situation
2.2 Government policies
2.2.1 The renewable energy policy in China
2.2.2 The Green Electricity Scheme in Shanghai
2.3 Evidence from other countries
2.4 Development of factors influencing WTP
2.4.1 Income of Chinese residents
2.4.2 The price of electricity
2.4.3 Government support policies
2.4.4 Environmental conditions
3. Hypotheses
4. Methodology
4.1 Methodology
4.2 Data description
4.3 The econometric model
4.3.1 Dependent variables
4.3.2 Independent variables
4.3.3 Control variables
4.3.4 Descriptive statistics
5. Model testing
6. Results
7. Robustness check
8. Discussion
9. Conclusion
10. References
Research Objectives & Topics
This thesis examines the determinants of Chinese consumers' willingness to pay (WTP) for green electricity, specifically analyzing how economic factors (such as income, subsidies, and energy pricing) and environmental concerns influence purchase decisions. By employing an econometric analysis of the Chinese General Social Survey (CGSS) from 2010, the research aims to provide evidence-based insights for policy implementation regarding renewable energy.
- Analysis of China's current energy situation and reliance on fossil fuels.
- Evaluation of government renewable energy policies, including the Green Electricity Scheme in Shanghai.
- Comparative analysis of international consumer behavior regarding green energy.
- Econometric modeling of economic and environmental drivers using a Linear Probability Model.
Excerpt from the Book
2.4.2 The price of electricity
In China, it was not the electricity producing firms but the Chinese government set out both the legal framework and the policies to determine the development of conventional and renewable energy prices. The respective local governments of each province on the other hand have to assure that those policies and relevant provisions are correctly implemented. Hence, both the producers and the consumers have no say in setting any price decisions regarding the progress of electricity prices. In particular, the Chinese government wants to keep the electricity prices low in order to support the overall GDP growth. Even so, as also in many developed countries, the environmental externalities associated with the production and consumption of coal-fired energies have not been reflected in the rather low price of conventional electricity (Li, 2011).
As can be drawn from figure 5, the price of electricity with focus on the Chinese household sector is relatively low when compared to other OECD countries in the year 2007. For China, the household electricity price is only 0.06 USD per kWh, which is much less when compared to the prices for Germany (0.26 USD per kWh), the UK (0.22 USD per kWh), Japan (0.18 USD per kWh) and other OECD countries. Additionally, China lies far below the average electricity cost within the OECD countries of 0.14 USD per kWh.
Chapter Summary
1. Introduction: Presents the context of China's environmental degradation versus its investment in renewable energy and defines the research question regarding consumers' willingness to pay for green electricity.
2. Previous Research: Reviews China's energy situation, government policies such as the Renewable Energy Law, and international evidence on consumer attitudes toward renewable power.
3. Hypotheses: Formulates four hypotheses regarding the impact of income, government subsidies, price levels, and personal health status on the WTP for green electricity.
4. Methodology: Introduces the Linear Probability Model and describes the dataset from the Chinese General Social Survey used for the econometric analysis.
5. Model testing: Details the diagnostic tests performed on the econometric model, including multicollinearity, heteroscedasticity, and omitted variable tests.
6. Results: Reports the statistical findings from the regression analysis, highlighting the role of control variables like education and household expenditure.
7. Robustness check: Validates the stability of the primary model results by comparing them with an alternative Probit model approach.
8. Discussion: Interprets the findings within the context of existing literature, addressing limitations such as the "bandwagon effect" and the hypothetical nature of survey responses.
9. Conclusion: Summarizes the key insights, noting that environmental and economic factors play a limited role in current WTP, and suggests the importance of improved information provision.
10. References: Lists the academic literature, statistical yearbooks, and official documents consulted for the study.
Keywords
China, renewable electricity, willingness to pay, economic factors, environmental factors, purchase decisions, Chinese General Social Survey, green energy policy, income distribution, electricity pricing, renewable energy law, consumer behavior, econometric analysis, sustainability, energy consumption.
Frequently Asked Questions
What is the core focus of this thesis?
The research investigates the factors influencing the willingness to pay (WTP) for green electricity among Chinese consumers, specifically analyzing the impact of economic and environmental variables.
Which specific variables are analyzed?
The study examines income, the influence of government subsidies, electricity price levels, and personal health conditions as primary independent variables.
What is the primary research question?
The research seeks to identify what role environmental and economic factors play for the Chinese consumers' willingness to pay for green electricity.
What scientific method is utilized?
The author applies a Linear Probability Model (LPM) for the primary analysis and uses a Probit model to ensure the robustness of the findings.
What does the main body of the paper cover?
It includes a comprehensive overview of China's energy landscape, a review of relevant government policies, the derivation of hypotheses, detailed methodology, model results, and a critical discussion of the findings.
Which keywords best characterize the work?
Key terms include China, green electricity, WTP, econometric analysis, government subsidies, and consumer attitudes.
How does the "Green Electricity Scheme in Shanghai" perform?
The scheme has faced significant challenges, including low consumer awareness and high costs relative to conventional electricity, leading to low subscription rates below 1 percent.
Does income level directly correlate with WTP in this study?
The study finds that when controlling for other factors, income does not play a significant role in determining WTP, whereas the educational level of the consumer appears to be a more influential factor.
What is the "free-rider problem" mentioned in the thesis?
It refers to the economic challenge where individuals receive the benefits of a public good (like a better environment) without personally contributing to the cost of its production.
What conclusion does the author reach regarding government policy?
The author concludes that simply providing subsidies is insufficient and that the government must focus more on educating the public and increasing general awareness about the benefits of green electricity.
- Quote paper
- Anneke Bösche (Author), 2016, The Chinese Consumers' Attitudes towards their 'Willingness to Pay' for Renewable Electricity, Munich, GRIN Verlag, https://www.grin.com/document/335148
